This doesn’t sound like good news.
[FDIC] is planning to beef up its staff — including temporarily hiring up to 25 retired FDIC employees who worked in the agency’s more than 200-person division that handles failed banks — to handle an anticipated increase in bank failures.
If you keep funds in some of the smaller online banks, you might want to reconsider your saving strategy. While the FDIC insures deposit accounts up to $100,000 per depositor, you might be exposed to delays when withdrawing your money if your bank disappears. Last year, NetBank failed and its accounts were absorbed by ING Direct. Individuals and companies had trouble getting money out. This could become more common in the next year or so.
To help stave off bank failure, the government is bailing out American banks. However, it is not the United States government; foreign investors are investing heavily in domestic banks through sovereign wealth funds, which basically means that banks in this country are increasingly owned by overseas governments.
Singapore recently paid $4.4 billion for an ownership stake in Merrill Lynch. The Chinese bought a $5 billion piece of Morgan Stanley… Middle Eastern and East-Asian “sovereign wealth funds” are in the process of owning a larger and larger portion of the global banking system.
The foreign governments aren’t investing enough to gain control of the companies or seats on the Board of Directors, but there is some chatter about requiring more disclosure from soverign wealth funds.
Updated February 10, 2011 and originally published February 27, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.